Consentia on Multidisciplinary Research

ACQUISITION OF LAND FOR COMPANIES – A COMPARATIVE STUDY OF THE PROVISIONS OF RFCTLARR ACT, 2013 AND LAND ACQUISITION ACT, 1894

OVERVIEW OF LAND ACQUISITION ACT, 1894 GERMANE TO ACQUISITION OF LAND BY COMPANIES.

One of the most debatable issues under the Land acquisition Act 1894 is interpretation of ‘public purpose’ around which disputes concerning acquisition revolve. Private companies acquire land for infrastructure, power, residential or such similar projects and the notification under sections 4 and 6 of the Act are challenged on the ground that land is being taken over for private purposes or by a private entity. The government acquires private land by applying the principles and rules under the provisions of the Act 1894. However, different states have also enacted own compensation and acquisition rules independent of the Act.

The original Land Acquisition Act was a colonial legislation enacted by the British government primarily to acquire private land to lay railways lines and for other such construction works. The Act was adopted into the Indian Constitution and is being used by the government, albeit a few amendments.

As per Land Acquisition (Companies) Rules, 1963 dictates that whenever a company makes an application to the appropriate Government for acquisition of any land, that Government shall direct the Collector to submit a report to it on the viability of the application.

“PUBLIC PURPOSE” IN LAND ACQUISITION ACT, 1894

The preamble to the Land Acquisition Act states it is for the acquisition of land needed for public purposes “or for companies and for determination of the amount of compensation to be made on such acquisition”.

The term ‘public purpose’ has been defined in the Black’s Law Dictionary (Fifth Edition) as: “A public purpose or public business has for its objective the promotion of the public health, safety, morals, general welfare, security, prosperity and contentment of all the inhabitants or residents within a given political division, as, for example, a state, the sovereign powers of which are exercised to promote such public purpose or public business”.

The concept was the work of by Hugo Grotius is in his work “De jure Belli et Pacis” in 1525. It deals with the compulsory acquisition of land for public purpose and states that a State can acquire private land for public purpose. However, under the new Land Acquisition Bill-2011, amended in September, 2010 and passed by the Lok Sabha in August of 2012, the term ‘public purpose’  has been elaborated by inserting a new clause, 3(za). It states:

THIS CLAUSE INCLUDES

(i) the provision of land for strategic purposes relating to naval, military, air force, and armed forces of the Union or any work vital to national security or defense of India or State police, safety of the people;

(ii) the provision of land for railways, highways, ports, power and irrigation purposes for use by Government and public sector companies or corporations; or

(iii) the provision of land for project affected people;

(iv) the provision of land for planned development or the improvement of village sites or any site in the urban area or provision of land for residential purposes for the weaker sections in rural and urban areas or the provision of land for Government administered educational, agricultural, health and research schemes or institutions;

(v) the provision of land for residential purposes to the poor or landless or to persons residing in areas affected by natural calamities, or to persons displaced or affected by reason of the implementation of any scheme undertaken by Government, any local authority or a corporation owned or controlled by the State;

(vi) the provision of land in the public interest for

(A) use by the appropriate Government for purposes other than those covered under sub-clauses (i), (ii), (iii), (iv) and (v), where the benefits largely accrue to the general public; or

(B) Public Private Partnership projects for the production of public goods or the provision of public services;

(vii) the provision of land in the public interest for private companies for the production of goods for public or provision of public services: Provided that under sub-clauses (vi) and (vii) above the consent of at least eighty per cent of the project affected people shall be obtained through a prior informed process to be prescribed by the appropriate government;

Provided further that where a private company after having purchased part of the land needed for a project, for public purpose, seeks the intervention of the appropriate Government to acquire the balance of the land it shall be bound by rehabilitation and resettlement provisions of this Act for the land already acquired through private negotiations and it shall comply with all provisions of this Act for the remaining area sought to be acquired.

DEFENCE FOR CHALLENGING ‘PUBLIC PURPOSE’

In most cases, the ground of attack on ‘public purpose’ is that the land is acquired by a private entity for industrial purpose is not for the benefit of the public at large. The determining factor in such cases is the publication of notification under section6 of the said Act which calls for a declaration that the particular land is needed for a public purpose or for a company “when the Government is satisfied after considering the report, if any, made under Section 5A(2)”.

It has been explicitly made clear that such a declaration shall be subject to the provisions of Part VII of the Act under the chapter ‘Acquisitions of Land for Companies’. Thus, Section 6 reiterates the apparent distinction between acquisition for a public purpose and acquisition for a company.

There is an important and crucial proviso to Section 6 which has a bearing on the question whether an acquisition is for public purpose or for private use. The second proviso states that “no such declaration shall be made unless the compensation to be awarded for such property is to be paid by a company, wholly or partly, out of public revenues or some fund controlled or managed by local authority”.

Explanation 2 then clarifies that where compensation to be awarded it is to be paid out of the funds of a corporation owned or controlled by the State and such compensation shall be deemed to be compensation “paid out of public revenues”. Thus, a provision for payment of compensation, wholly or partly, out of public revenues or some fund controlled or managed by a local authority is sine qua non for making a declaration to the effect that a particular land is needed for public good. If the said company is not involved in public good, the acquisition shall not be deemed to be acquisition for a public purpose unless at least a part of the compensation is payable out of public revenues, including the fund of a local authority or the funds of a corporation owned or controlled by the state.

Another important provision is Sub-Section (3) which entails that such a declaration shall be conclusive evidence that the land is needed for public purpose for a private entity and on the publication of the declaration, the appropriate Government is enabled to acquire the land in accordance with the other provisions of the Act. However, this is subject to the government’s discretion, in the case of which it can be challenged and the declaration can be declared null and void.

In Gayatri Prasad and 5 Others v. Shri Kishore Bhaduricase,the Chattisgarh High Court on September 4, 2012, had referred to various judgments of the Supreme court while discussing the provisions of  Section 6 of the Land Acquisition Act. On these basis, the court had held that if no part of compensation amount was to be paid out of public revenues, then the declaration that the land was needed for public purpose cannot be validly made and the acquisition cannot be considered to be for a public purpose.

IMPACT OF AMENDMENT

The rider in the amendment that makes mandatory seeking consent of 80 per cent land owners while acquiring land has put private companies in a tight spot. Other amendments under different provisions in new Bill have already raised the compensation bar to be given to land owners, which can now fetch them maximum cost of their land to give consent for it to be acquired.

However, the ambiguity surrounding the ‘public purpose’ under the Act continues to dominate land acquisitions. It would perhaps be wiser to settle such cases outside courts and ensure that a reasonable compensation is paid through amicable settlement in cases between private entities and land owners.

CALL FOR A NEW BILL

There is unanimity of opinion across the social and political spectrum that the current Law (The Land Acquisition Act 1894) suffers from various shortcomings. Some of these include:

  • Forced acquisitions: Under the 1894 legislation once the acquiring authority has formed the intention to acquire a particular plot of land, it can carry out the acquisition regardless of how the person whose land is sought to be acquired is affected.
  • No safeguards: There is no real appeal mechanism to stop the process of the acquisition. A hearing (under section 5A) is prescribed but this is not a discussion or negotiation. The views expressed are not required to be taken on board by the officer conducting the hearing.[1]
  • Silent on resettlement and rehabilitation of those displaced: There are absolutely no provisions in the 1894 law relating to the resettlement and rehabilitation of those displaced by the acquisition.
  • Urgency clause: This is the most criticised section of the Law. The clause never truly defines what constitutes an urgent need and leaves it to the discretion of the acquiring authority. As a result almost all acquisitions under the Act invoke the urgency clause. This results in the complete dispossession of the land without even the token satisfaction of the processes listed under the Act.
  • Low rates of compensation: The rates paid for the land acquired are the prevailing circle rates in the area which are notorious for being outdated and hence not even remotely indicative of the actual rates prevailing in the area.
  • Litigation: Even where acquisition has been carried out the same has been challenged in litigations on the grounds mentioned above. This results in the stalling of legitimate infrastructure projects.
  • Recent observations by the Supreme Court: Justice Ganpat Singhvi of the Supreme Court has observed, in the wake of repeated violations that have come to light over the last few months, that the law has “become a fraud”. He observed that the law seems to have been drafted with “scant regard for the welfare of the common man”.
  • Another bench of the Supreme Court has echoed this sentiment in its observation that “ The provisions contained in the Act, of late, have been felt by all concerned, do not adequately protect the interest of the land owners/persons interested in the land. The Act does not provide for rehabilitation of persons displaced from their land although by such compulsory acquisition, their livelihood gets affected …To say the least, the Act has become outdated and needs to be replaced at the earliest by fair, reasonable and rational enactment in tune with the constitutional provisions, particularly, Article 300A of the Constitution. We expect the law making process for a comprehensive enactment with regard to acquisition of land being completed without any unnecessary delay.”

“PUBLIC PURPOSE” IN THE RIGHT TO FAIR COMPENSATION AND TRANSPARENCY IN LAND ACQUISITION, REHABILITATION AND RESETTLEMENT ACT, 2013

Section 2 of RFCTLARR Act has an expansive definition of public purpose and infrastructure and also a clause which leaves the discretionary power to declare anything as infrastructure and of public purpose. Infrastructure has been equated with public purpose, which is ironic, given that expert committee is to make a decision about the public purpose. One must realise that every land to be acquired is serving public purpose of one kind or the other, single or multi crop land is also serving public purpose, hence a limited definition of public purpose was required, not an all encompassing, including even private profit projects.

ACQUISITION FOR PRIVATE AND PPP PROJECTS: The most regressive step in the RFCTLARR Act is the role of government in acquisition for private and PPP projects, which are for profit and not for public purpose, Section 2(2). In this era of neo-liberal economic reforms, private projects with corporate investment and interests are taking a much larger toll of land and other rich natural resources as also uprooting by killing communities which are generations old. This must come to an end and the same can happen only with stopping the State playing a role of facilitator and land dealer. At the cost of the livelihood of the nature based sections and working class section of society, the state cannot transfer the most valuable livelihood resources such as land, water to the profiteering bodies in the garb of ‘public interest’ and ‘public purpose’. Provisions of free prior informed consent and consultation of local self Government institutions, one of the key features advertised in favour of the RFCTLARR Act is the 70% consent of land owners for PPP projects and 80% consent of the land owners for the private projects, Section 2(2)(b). However, as we said that even with consent, government has no business acquiring land for the private corporation’s profit, in the name of public purpose. Except for scheduled areas, Section 41(3), RFCTLARR Act mandates no consent of the Gram Sabha in government developed PPP. This is completely unacceptable given that post independence maximum acquisitions were done for the public sector companies leading to massive displacement.

SOCIAL IMPACT ASSESSMENT AND DETERMINATION OF PUBLIC PURPOSE: One of the demands made by us was for compulsory social impact assessment to evaluate the extent of impact on various sections of society affected by displacement, given massive impoverishment and unnecessary acquisition of extra land and forcible acquisition without any options assessment.

The right or power of a sovereign State to appropriate the private property called as power of “eminent domain” has been explained. Eminent domain is right or power of a sovereign State to appropriate private property within the territorial sovereignty to public use or purpose. It is an exercise of strong arm of the Government to take property for public use without the owners consent. It requires no constitutional recognition; it is an attribute of sovereignty and essential to the sovereign government[2]. The power of “eminent domain” being inherent in the Government is exercisable in the public interest, general welfare and for public purpose. Acquisition of private property by the State in the public interest or for public purpose is nothing but an enforcement of right of “eminent domain”. In India, the Act provides directly for acquisition of particular property for public purpose.[3] The expropriatory legislation as is well known must be strictly construed. When the properties of a citizen are being compulsorily acquired by State in exercise of its power of “eminent domain”, the essential ingredients thereof, namely, existence of a public purpose and payment of compensation are principal requisites therefor.

Public purpose as per RFCTLARR Act, 2013 is provided as such

Section 2(1) of the Act defines the following as public purpose for land acquisition within India:

  • For strategic purposes relating to naval, military, air force, and armed forces of the Union, including central paramilitary forces or any work vital to national security or defence of India or State police, safety of the people; or
  • For infrastructure projects, which includes the following, namely:
    • All activities or items listed in the notification of the Government of India in the Department of Economic Affairs (Infrastructure Section) number 13/6/2009-INF, dated 27 March 2012, excluding private hospitals, private educational institutions and private hotels;
    • Projects involving agro-processing, supply of inputs to agriculture, warehousing, cold storage facilities, marketing infrastructure for agriculture and allied activities such as dairy, fisheries, and meat processing, set up or owned by the appropriate Government or by a farmers’ cooperative or by an institution set up under a statute;
    • Project for industrial corridors or mining activities, national investment and manufacturing zones, as designated in the National Manufacturing Policy; Project for water harvesting and water conservation structures, sanitation; Project for Government administered, Government aided educational and research schemes or institutions;
    • Project for sports, health care, tourism, transportation of space programme; any infrastructure facility as may be notified in this regard by the Central Government and after tabling of such notification in Parliament;
  • Project for project affected families; Project for housing, or such income groups, as may be specified from time to time by the appropriate Government; Project for planned development or the improvement of village sites or any site in the urban areas or provision of land for residential purposes for the weaker sections in rural and urban areas;
  • Project for residential purposes to the poor or landless or to persons residing in areas affected by natural calamities, or to persons displaced or affected by reason of the implementation of any scheme undertaken by the Government, any local authority or a corporation owned or controlled by the State.

When government declares public purpose and shall control the land directly, consent of the land owner shall not be required. However, when the government acquires the land for private companies, the consent of at least 80% of the project affected families shall be obtained through a prior informed process before government uses its power under the Act to acquire the remaining land for public good, and in case of a public-private project at least 70% of the affected families should consent to the acquisition process.

The Act includes an urgency clause for expedited land acquisition. The urgency clause may only be invoked for national defense, security and in the event of rehabilitation of affected people from natural disasters or emergencie

CONCLUSION

There are many more detailed points in the act which need our attention, but overall, the act doesn’t protect land rights or deals with the historic injustices committed in the name of development and public purpose for inclusive planning. It is solely aimed at facilitating land acquisition for coporarates without any stock taking of the land acquired, used or lying vacant and so on. The rapacious use of Land Acquisition Act, 1894 by the government to secure land for ‘development projects’ has caused over 100 million people to be displaced from their land, livelihoods and shelters. The country is dotted with communities resisting State sponsored land grab which resonate the demand for a just law to ensure that there is no forced acquisition of land and resources, including minerals and ground water. The government must respond to the voices from movements across places such as Narmada, Koel Karo, Singur, Nandigram, Sonbhadra, Chindwara, Bhavnagarm, Kalinga Nagar, Kashipur, Raigarh, Srikakulam and mining areas in central India with genuine efforts to address the longstanding crisis concerning land acquisition and R&R. If the political parties are serious about addressing the conflicts over the land and other natural resources then they must listen to the voices of those struggling or else it will only aggravate these conflicts all across the country. The need of growth, infrastructure and urbanisation can’t be fulfilled on the graveyard of millions. A pro-people development planning act with complete participation of the Gram Sabha will go a long way in stopping the massive corporate corruption and lead to decentralization of power having an overall impact on the politics of the country.

[1]  Pratibha Nema Vs. State of M.P. (2003) 10 SCC 626

[2] Words and Phrases Permanent Edition Volume 14, 1952, West Publishing Company

[3] Hindustan Petroleum Corpn. Ltd. v. Darius Shapur Chennai (2005) 7 SCC

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